Exchange and completion are two of the most important milestones in the conveyancing process, but if you have never bought a property before, it is not always obvious what they mean or what happens at each stage.
Exchange of contracts is the point at which the transaction becomes legally binding. Completion is the day the purchase is finalised, the purchase money is transferred and you become the legal owner of the property.
At AK Law Solicitors, our Residential Property team supports buyers across London and the surrounding areas from the beginning of the conveyancing process through to completion. In this guide, we explain what to expect as your purchase reaches these final stages.
What Is Exchange of Contracts?
Exchange of contracts takes place once the buyer and seller are ready to commit to the transaction.
Before exchange, the legal work will usually need to have progressed sufficiently for your solicitor to be satisfied that you understand the property and the terms on which you are buying it. This commonly includes reviewing the contract and title, considering searches and enquiries, dealing with mortgage requirements where applicable and agreeing a completion date.
The buyer and seller sign their respective contracts and their solicitors formally exchange them. At that point, the agreement to buy and sell becomes legally binding.
When Are You Ready to Exchange?
Every transaction is different, but before exchange your solicitor will usually want the key legal and financial arrangements to be in place.
Depending on your purchase, this can include:
· The contract and title have been reviewed
· Property searches have been received and considered
· Relevant enquiries have been answered satisfactorily
· Your mortgage offer is in place, where applicable
· Any survey issues you wish to address have been considered
· The deposit and other required funds are available
· A completion date has been agreed
Your solicitor will explain any outstanding matters and will normally obtain your authority before exchange takes place.
Why Is Exchange So Important?
Before exchange, either party can generally decide not to proceed, although they may still have incurred costs.
Once contracts are exchanged, the agreement becomes legally binding. Pulling out after exchange can have serious financial and legal consequences.
This is why your solicitor will want to make sure that the necessary checks have been completed and that you are ready to proceed before committing you to the purchase.
When Is the Deposit Paid?
A deposit is usually dealt with on exchange of contracts.
The amount and arrangements can vary depending on the transaction, including where a buyer is part of a property chain. Your solicitor will confirm how much is required and when the funds need to be available.
It is important to follow your solicitor's instructions about transferring funds and to allow enough time for cleared money to reach the client account.
What Happens Between Exchange and Completion?
Once contracts have been exchanged, attention turns to preparing for completion.
During this period, your solicitor may:
· Carry out final pre-completion searches
· Deal with mortgage lender requirements
· Prepare the completion statement
· Confirm the balance you need to provide
· Arrange for mortgage funds to be requested
· Prepare the documents needed for completion
As the buyer, this is also the time to finalise practical arrangements such as removals and preparing for your move.
How Long Is There Between Exchange and Completion?
There is no single period that applies to every transaction.
Exchange and completion may be separated by a period agreed between the parties, while in some cases they can take place on the same day.
The appropriate timing will depend on the circumstances of the buyer and seller, any property chain, mortgage arrangements and the practical requirements of the move.
Your solicitor will discuss the proposed completion date with you before exchange.
What Happens on Completion Day?
Completion is the point at which the purchase is finalised.
On completion day, your solicitor will arrange for the purchase money to be transferred to the seller's solicitor. Once the seller's solicitor confirms that completion has taken place, the estate agent can normally release the keys to you.
You can then take possession of the property in accordance with the contract.
Completion times can vary, particularly where there is a chain of transactions, so it is sensible to keep moving arrangements flexible until confirmation has been received.
When Do You Get the Keys?
Keys are normally released once the seller's solicitor has received the completion funds and confirmed that the transaction has completed.
The estate agent will usually hold the keys and will be authorised to release them after that confirmation.
Your solicitor will let you know when completion has taken place so you can collect the keys and move into your new home.
What Happens if Something Goes Wrong After Exchange?
Because exchange creates a legally binding agreement, failing to complete is a serious matter.
The consequences will depend on the contract and the circumstances. There may be financial penalties, claims for losses or other legal consequences.
If an unexpected problem arises after exchange, contact your solicitor immediately so they can advise you on the position and the steps that may need to be taken.
What Does Your Solicitor Do After Completion?
Although you may have collected the keys, there is still legal work for your solicitor to complete.
Depending on the transaction, this can include:
· Submitting any Stamp Duty Land Tax return and arranging payment where required
· Applying to HM Land Registry to register you as the new owner
· Dealing with mortgage registration requirements
· For leasehold property, serving relevant notices or dealing with post-completion requirements
HM Land Registry registration can take place after you have moved into the property, so do not be concerned if the registration process is not completed immediately on moving day.
Exchange and Completion: The Key Difference
The simplest way to remember the distinction is:
· Exchange = you become legally committed to the purchase.
· Completion = the purchase money is transferred, the transaction completes and you can take possession of the property.
Both are major milestones, and your solicitor will guide you through the steps needed to reach them.
How AK Law Can Help
The final stages of a property purchase can feel exciting and stressful in equal measure. Clear communication is particularly important as you approach exchange and completion so that you understand what is happening and what is required from you.
At AK Law Solicitors, our experienced Residential Property team provides practical, straightforward advice throughout the conveyancing process, from reviewing the initial contract and searches through to exchange, completion and registration of your new property.
Whether you're a first-time buyer, moving home or expanding your property portfolio, we're here to help keep your transaction moving and make the process as straightforward as possible.
You may also find these guides useful:
· A Step-by-Step Guide to Buying a Property in London
· How to Choose the Right Conveyancing Solicitor in London: 10 Things to Check Before You Instruct
